Draft Interpretation Note for comment – exemption of income of ships used in international shipping
31 October 2022
The draft Interpretation Note provides guidance on the interpretation and application of section 12Q, which provides for an exemption from normal tax, capital gains tax, dividends tax and withholding tax on interest for an international shipping company meeting the requirements of the section.
Section 12Q provides exemption of income in respect of ships used in international shipping. For this purpose it provides various definitions, including:
- “international shipping” means the conveyance for compensation of passengers or goods by means of the operation of a South African ship mainly engaged in international traffic;
- “international shipping company” means a company that is a resident that operates one or more South African ships that are utilised in international shipping;
- “international shipping income” means the receipts and accruals of a person derived from international shipping mainly from the operation of one or more ships contemplated in paragraph (a) of the definition of
- “South African ship” (a) which is registered in the Republic in accordance with Part 1 of Chapter 4 of the Ship Registration Act, 1998 (Act No. 58 of 1998); or (b) another ship or ships used temporarily in lieu of the ship contemplated in paragraph (a) by virtue of that ship being subject to repair or maintenance.
The interpretation note provides further guidance on when section 12Q may be applied.
Read the interpretation note here.
